More cost cutting lets Best Buy turn a profit but revenue falls again

Another $95 million worth of cost cutting enabled Best Buy to report a profit for the first quarter.

But while investors cheered Thursday's better-than-expected earnings report, analysts noted that revenue at the electronics retailer continues to fall and Best Buy may be running out of places to cut costs.

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Bloomberg News notes the Twin Cities-based company reported net income per share of $1.31 which compares to 24 cents per share a year earlier.

In Best Buy's earnings report President and CEO Hubert Joly said the company trimmed costs by $95 million in the first quarter, bringing the total cost-cutting associated with the "Renew Blue" movement to $860 million.

Bloomberg says Joly has stabilized Best Buy, largely by cutting expenses and renovating stores to include spaces for vendors such as Samsung Electronics. Sales continue to lag, though, with a disappointing holiday season causing the stock price to fall by one-third since the middle of January.

Thursday's report showed revenue fell another 3.3 percent, the Star Tribune says. And the newspaper notes company executives do not expect revenue to rebound in the next six months because manufacturers have no major new products coming out before the holiday season. "We need some new excitement in those categories," Chief Financial Officer Sharon McCollam says.

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Forbes says that less than optimistic outlook was likely behind a morning dip in Best Buy's stock price but by afternoon investors were focused on the profit and the stock finished the day with a gain of 87 cents a share.

But the profit report did not soothe concerns about the company's future. Investor Place notes Best Buy's revenue has fallen for nine straight quarters and calls that an unsustainable model.

One analyst tells Bloomberg that Best Buy has done a good job of cutting costs but may be running out of places to trim and needs to reverse the revenue decline.